Exhibit 10.5
ABAXIS, INC.
1998 STOCK OPTION PLAN
1. Purpose.
The Abaxis, Inc. 1989 Stock Option Plan (the "Initial
Plan") was established to create additional
incentive for employees, directors
and consultants of Abaxis, Inc. and any
successor corporation thereto
(collectively referred to as the
"Company"), and any present or future parent
and/or subsidiary corporations of such
corporation (all of whom along with the
Company being individually referred to as a
"Participating Company" and
collectively referred to as the
"Participating Company Group"), to promote the
financial success and progress of the
Participating Company Group. The Initial
Plan is hereby amended and restated in its
entirety as the Abaxis, Inc. 1998
Stock Option Plan (the "Plan") as of July
21, 1998. For purposes of the Plan, a
parent corporation and a subsidiary
corporation shall be as defined in sections
424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code").
2.
Administration.
(a)
Administration by Board and/or Committee. The Plan shall
be administered by the Board of Directors
of the Company (the "Board") and/or by
a duly appointed committee of the Board
having such powers as shall be specified
by the Board. Any subsequent references
herein to the Board shall also mean the
committee if such committee has been
appointed and, unless the powers of the
committee have been specifically limited,
the committee shall have all of the
powers of the Board granted herein,
including, without limitation, the power to
terminate or amend the Plan at any time,
subject to the terms of the Plan and
any applicable limitations imposed by law.
All questions of interpretation of
the Plan or of any options granted under
the Plan (an "Option") shall be
determined by the Board, and such
determinations shall be final and binding upon
all persons having an interest in the Plan
and/or any Option.
(b)
Options Authorized. Options may be either incentive
stock options as defined in section 422 of
the Code ("Incentive Stock Options")
or nonstatutory stock options.
(c)
Authority of Officers. Any officer of a Participating
Company shall have the authority to act on
behalf of the Company with respect to
any matter, right, obligation, or election
which is the responsibility of or
which is allocated to the Company herein,
provided the officer has apparent
authority with respect to such matter,
right, obligation, or election.
(d)
Administration with Respect to Insiders. With respect to
the participation in the Plan of officers
or directors of the Company subject to
Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange
Act"), the Plan shall be administered by
the Board in compliance with the
requirements, if any, of Rule 16b-3, as
promulgated under the Exchange Act and
amended from time to time or any successor
rule or regulation ("Rule 16b-3").
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(e)
Compliance with Section 162(m) of the Code. In the event
a Participating Company is a "publicly held
corporation" as defined in paragraph
(2) of section 162(m) of the Code, as
amended by the Revenue Reconciliation Act
of 1993 (P.L. 103-66), and the regulations
promulgated thereunder ("Section
162(m)"), the Company may establish a
committee of outside directors meeting the
requirements of paragraph 4(C)(i) of
Section 162(m) to approve the grant of
Options which might reasonably be
anticipated to result in the payment of
employee remuneration that would otherwise
exceed the limit on employee
remuneration deductible for income tax
purposes pursuant to Section 162(m).
3.
Eligibility. The Options may be granted only to employees
(including officers), consultants and
directors of the Participating Company
Group. For purposes of the foregoing
sentence, "employees", "consultants" and
"directors" shall include prospective
employees, prospective consultants and
prospective directors to whom Options are
granted in connection with written
offers of employment or other service
relationship with the Participating
Company Group. The Board shall, in its sole
discretion, determine which persons
shall be granted Options (an "Optionee").
Any person who is not an employee on
the effective date of the grant of an
Option to such person may be granted only
a nonstatutory stock option. An Incentive
Stock Option granted to a prospective
employee upon the condition that such
person become an employee shall be deemed
granted effective on the date such person
commences employment with a
Participating Company, with an exercise
price determined as of such date in
accordance with paragraph 6(a). An Optionee
may, if otherwise eligible, be
granted additional Options.
4. Shares
Subject to Option. Options shall be options for the
purchase of the authorized but unissued or
reacquired shares of the Company's
common stock (the "Stock"), subject to
adjustment as provided in paragraph 9
below. The maximum number of shares of
Stock which may be issued under the Plan
shall be two million eight hundred eighty
six thousand (2,886,000) shares.
Subject to adjustment as provided in
paragraph 9 below, at any such time as a
Participating Company is a "publicly held
corporation" as defined in paragraph 2
of Section 162(m), no person shall be
granted within any fiscal year of the
Company Options which in the aggregate
cover more than fifty thousand (50,000)
shares; provided, however, that the
foregoing limit shall be two hundred fifty
thousand (250,000) shares with respect to
Options granted to any person during
the first fiscal year of such person's
employment with the Company (the "Per
Optionee Limit"). In the event that any
outstanding Option for any reason
expires or is terminated or cancelled
and/or shares of Stock subject to
repurchase are repurchased by the Company,
the shares allocable to the
unexercised portion of such Option, or such
repurchased shares, may again be
subjected to an Option.
5. Time for
Granting Options. All Options shall be granted, if at
all, within ten (10) years from July 21,
1998.
6. Terms,
Conditions and Form of Options. Subject to the provisions
of the Plan, the Board shall determine for
each Option (which need not be
identical) the number of shares of Stock
for which the Option shall be granted,
the option price of the Option, the
exercisability of
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the Option, whether the Option is to be
treated as an Incentive Stock Option or
as a nonstatutory stock option and all
other terms and conditions of the Option
not inconsistent with the Plan. Options
granted pursuant to the Plan shall be
evidenced by written agreements specifying
the number of shares of Stock covered
thereby, in such form as the Board shall
from time to time establish, and shall
comply with and be subject to the following
terms and conditions:
(a)
Option Price. The option price for each Option shall be
established in the sole discretion of the
Board; provided, however, that (i) the
option price per share for an Incentive
Stock Option shall be not less than the
fair market value, as determined by the
Board, of a share of Stock on the date
of the granting of the Option, (ii) the
option price per share for a
nonstatutory stock option shall not be less
than eighty-five percent (85%) of
the fair market value, as determined by the
Board, of a share of Stock on the
date of the granting of the Option and
(iii) no Incentive Stock Option granted
to an Optionee who at the time the Option
is granted owns stock possessing more
than ten percent (10%) of the total
combined voting power of all classes of
stock of a Participating Company within the
meaning of section 422(b)(6) of the
Code (a "Ten Percent Owner Optionee") shall
have an option price per share less
than one hundred ten percent (110%) of the
fair market value of a share of Stock
on the date the Option is granted.
Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a
nonstatutory stock option) may be
granted with an exercise price lower than
the minimum exercise price set forth
above if such Option is granted pursuant to
an assumption or substitution for
another option in a manner qualifying with
the provisions of section 424(a) of
the Code.
(b)
Exercise Period of Options. The Board shall have the
power to set the time or times within which
each Option shall be exercisable or
the event or events upon the occurrence of
which all or a portion of each Option
shall be exercisable and the term of each
Option; provided, however, that (i) no
Incentive Stock Option shall be exercisable
after the expiration of ten (10)
years after the date such Option is granted
and (ii) no Incentive Stock Option
granted to a Ten Percent Owner Optio
